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Good sign -- more Americans are looking for work

(MoneyWatch) COMMENTARY Good news. According to the
Bureau of Labor
Statistics, nonfarm payroll employment rose by 227,000 in February, although the
unemployment rate was unchanged at 8.3 percent.

How can it be good news that the unemployment rate stayed flat? The rate falls when more people get jobs, and it increases when more people enter the
labor force and begin looking for jobs. As the government's latest employment report shows, these two factors
offset each other last month, leaving the unemployment rate unchanged. There were more jobs,
but also more people looking for work.

As the BLS reports, "The civilian labor force
participation rate, at 63.9 percent, and the employment-population ratio, at
58.6 percent, edged up over the month." That more people are job-hunting is encouraging because it indicates their growing optimism about the chances of
finding employment.

The job-creation number is also a positive sign, even it falls short of the level we need to recover in an acceptable
amount of time. At this rate, it will be several years before the economy reaches full
employment. That's too long, and I have been hoping to see signs that job growth
is accelerating. Economic recoveries following past recessions have seen several months
with 300,000 or 400,000 jobs created. We need job-creation of this magnitude to
keep up with population growth and to provide jobs for the millions of people still
looking for work.

This labor report does suggest that job-creation is accelerating. The increase
in employment is broad-based, for instance, and every month the job-creation figures look a bit
better. If the acceleration in job growth continues, that will be a very
welcome development.

Will it continue? It would be a mistake not to expect rough
spots on the road to recovery -- there will inevitably be setbacks. We cannot
be certain that job-creation will continue to accelerate. Trouble in Iran could cause
oil prices to spike, which would be very bad news. Europe looks better, but
surprises are always possible, and other risks loom.

So while the labor market is improving, it's still too soon for policymakers to
forget about the job market and turn their attention elsewhere (though they have
mostly done that anyway). And it's certainly too soon to begin reversing course by boosting interest rates or focusing on deficit-reduction. The economy is looking more
hopeful, but until those hopes are realized we need to keep doing all we can to
help the labor market recover.

View all articles by Mark Thoma on CBS MoneyWatch»
Mark Thoma is a macroeconomist and time-series econometrician at the University of Oregon. His research focuses on how monetary policy affects the economy, and he has worked on political business cycle models. Mark is currently a fellow at The Century Foundation, and he blogs daily at Economist's View.